The MSCI India Index has been higher by 33.4% over the past three years. And some of the relevant exchange traded funds have performed even better than that. India stocks are in the midst of one of the longest bull runs in the country’s history.
Regardless of region, lengthy bull markets often prompt concern among investors about how much gas is left in the tank. For investors considering the VanEck India Growth Leaders ETF (GLIN ), those concerns could be allayed because some market observers believe there’s durability for the India bull market – an important point when considering GLIN has surged 38.7% over the past three years.
The now lengthy rally by India stocks has coincided with impressive growth in the country’s economy. There has been several impressive years of GDP growth and expectations of more of the same. As a result, some experts believe India will surpass Japan and Germany to become the third-largest economy as soon as 2027.
Elections Could Support GLIN Upside
Many investors in the U.S. are focused on this November’s presidential election. However, India is in the midst of national elections. They started on April 19 and are slated to run through June 1. Due to its population, now the world’s largest, India uses a seven-phase electoral process.
Prime Minister Narendra Modi is widely expected to win another term. Financial markets may have already accounted for a Modi victory. But that doesn’t imply that GLIN lacks near to medium-term catalysts.
“The market may have priced in election results already, but we see a number of reasons, such as growing domestic investment in equities, improving social equity, and a fast-evolving tech sector, that support earnings cycle growth and a corresponding lift to share prices,” noted Ridham Desai, Morgan Stanley’s Chief Equity Strategist for India. “These and other changes that could boost earnings 20% annually for the next five years still aren’t baked into share prices.”
Regarding the current bull market, GLIN investors might want to pay attention to a data point mentioned by Desai. This bull run in India stocks is 80% as long as the longest such run. However, the current rally lags the other by 30%. In other words, there could be more upside to come. And the country’s appealing economic growth could be the catalyst for that upside.
“Morgan Stanley expects India to drive one-fifth of global growth in the coming decade. An assumption that hinges on the country’s growing status as the back office and factory to the world, as well as a burgeoning consumer class empowered by a digital economy and a transition to green energy,” according to the bank. “India’s stock market reflects this narrative and has been on a steady rise, marking new highs. Investors’ confidence in future growth and moderating volatility, especially compared with other emerging markets equities, is driving up the price-to-earnings ratio.”
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